Securitization Provisions of the Dodd-Frank Act

Abstract

Certain of the provisions of the the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 will significantly affect the securitization industry. In general, the securitization provisions in the Act: (1) define asset-backed security; (2) provide for credit risk retention (i.e., the proverbial “skin in the game”) by securitizers and/or originators with certain exceptions, including for issuances backed by qualified residential mortgages; and (3) provide for disclosures and reporting for asset-backed securities. Certain of the provisions became effective upon enactment of the Act. The remainder will not become effective until after rule making by applicable federal banking agencies, the SEC and other regulatory authorities. Although directions and considerations are provided in the Act with respect to such rule making, the full import and impact of the Act will not be known for some time.

TOPICS: Legal and regulatory issues for structured finance, legal/regulatory/public policy